Gov. Josh Shapiro at YWCA York to highlight the expansion of the Child and Dependent Care Tax Credit. (Credit: Commonwealth Media Services)
State lawmakers have passed and expanded tax credits aimed at making childcare affordable. But business groups say more is needed to address a provider shortage.
For many families, childcare in Pennsylvania is unaffordable and hard to access. It’s also rough on workers in the industry who receive low pay and don’t often remain in jobs.
The situation has gotten so bad that business groups from across Pennsylvania recently implored lawmakers to intervene, arguing that “virtually all economic sectors” are affected by the shortage. Working parents can’t find childcare so employers can’t fill open positions.
Pennsylvania lawmakers’ solution to this problem has typically been tax credits, which lower the amount of money a resident owes the state’s Department of Revenue.
Last December, lawmakers agreed to expand Pennsylvania’s child and dependent tax credit. As a result, families got a bump in the amount they could claim for childcare costs on their 2023 tax returns.
And the recent state budget includes a tax credit for Pennsylvania businesses that contribute to their employees’ childcare expenses.
However, local chambers of commerce say that tax credits fail to address the structural issues that plague the childcare industry — namely, a serious provider shortage driven by low wages. They’re not the only ones to identify this issue and push for solutions.
How helpful is the expanded child and dependent tax credit?
The tax credit provides up to $1,050 for one child, age 12 or younger, or $2,100 for two or more kids. In comparison, on the 2022 state tax return, a parent could only get up to $315 for one child, and $630 for two or more.
The Pennsylvania Department of Revenue says that for tax year 2023, 212,674 people claimed the Child and Dependent Care Enhancement Tax Credit on their Pennsylvania personal income tax return.
How much does $1,050 cover when it comes to child care?
The average cost of center-based childcare for toddlers in Pennsylvania is $11,346, annually, according to a 2023 report from the Annie E. Casey Foundation, a youth advocacy charity.
How else does Pennsylvania help families afford childcare?
The Child Care Works program subsidizes childcare for low-income families, and is funded by the state and federal governments.
Currently, 96,809 children receive subsidized childcare through this program, according to the Pennsylvania Department of Human Services. Advocates tell How We Care that providers often are unable to accept new children due to a lack of staff.
How bad is Pennsylvania’s childcare provider shortage?
Last summer, the statewide coalition Start Strong PA — which advocates for accessible, affordable childcare — commissioned a survey of 762 childcare programs. They reported 2,395 open positions resulting in the closure of 934 classrooms, which could serve an additional 26,000 children.
The coalition pinned the problem partly on low wages, as did the local chambers of commerce in their letter.
The annual mean salary is just $29,480 for a child care worker and $36,350 for a preschool teacher in Pennsylvania, according to a May 2023 report from the U.S. Bureau of Labor Statistics.
Why don’t providers just enroll more children to increase profits so they can raise wages?
There are strict limits on the number of kids that a childcare worker can supervise. For example, the state limits the number of 1- to 2-year-olds who can be supervised as a group to no more than 12, with a minimum of three staff members.
What do advocates want the state to do?
Advocates for the childcare industry say more government subsidies and grants are needed so that centers can raise employee wages.
Start Strong PA cites programs in Illinois, Nebraska, and Tennessee that provide salary supplements to early childhood workers.
The coalition of chambers that wrote the letter to state legislators is working with Start Strong PA to expand childcare access. In addition to endorsing stipends, the group also supports hiring and retention bonuses.
This story first appeared in How We Care, a weekly newsletter by Spotlight PA featuring original reporting and perspectives on how we care for one another at all stages of life. Sign up for free here.
